This is post 3 of 10 in a series discussing the essential steps for launching a successful, sustainable solopreneur business. If you missed the disclaimer post, it is helpful if you take a minute to read it before going forward. Here’s the link to the post.
Plus, since the process is in sequential order, make sure you’ve defined your UVP and prime prospects, and started your market research prior to creating your business plan.
One of the top five questions I get from solopreneurs is, “Do I need a business plan?” My answer is always, yes. However, this doesn’t mean you need a formal plan. The detail, complexity and length of your plan will vary depending on these key factors:
- The complexity of your business
- The amount and source of your funding
- The severity of the damages you will incur if your business fails
Business plans run the spectrum from a one-page outline or mini-plan to a 30-page formal business plan.
For example, if you wish to start an internet based business using a meager portion of your savings to bring in some secondary, passive income through affiliate sales while working your day job, you can get started right away with a basic outline or mini-plan.
However, if you are passionate about designing a patentable, reverse osmosis water filtration system requiring a $500,000 investment (a combination of mortgaging your house, cashing out the kids’ college funds, and outside investment), a formal plan is necessary.
What is a mini-plan?
A mini-plan will range in size from one to 10 pages (whereas a formal plan may often span from 18 – 30 pages). So what’s in a mini-plan? At minimum, you need to have the following:
- Your UVP
- A definition of your prime prospect
- A list of your prime competitors
- The products / services you will offer
- Finances needed to reach profitability
- How you will utilize those funds
- Legal structure and other necessary licenses, permits and certifications
- A marketing plan (from ads, to social media, joint venture partners, etc….)
What is a formal business plan?
If you do a search online for a “business plan template”, you will find a few different versions. So which do you use? Here are the sections an investor will want to see:
- Executive Summary
- Company Analysis
- Industry Analysis
- Customer Analysis
- Competitive Analysis
- Marketing Plan
- Operations Plan
- Management Bio(s)
- Financial Plans
Instead of simply cutting and pasting my recommendations of what you need to consider and include in each section, please jump over to my Planning page and review the information there.
What if you find yourself stuck (or simply fed-up with the process), where can you get help? You have a couple of options:
- Do a search online for “free business plan templates”.
- Buy a software package and fill out a template.
- Seek out a SCORE or SBDC counselor to give you some free advice.
- Hire a consultant (like me) to help you develop your plan and / or review and edit a final draft.
- Hire a consultant or company to draft your plan from scratch.
Here are pluses and minuses with each of these scenarios.
Templates and software packages are simply tools. They don’t fill it out for you. Moreover, most of these options focus solely on the formal plan structure.
Seeking out a SCORE or SBDC counselor offers you a no-cost alternative, however, they will typically only help with reviewing a final plan … and often only a formal plan.
Hiring a consultant (again, like me) will cost you some of your start-up funds, however, you will receive more active, personal attention. You may be questioning, “Why would I pay you when I can get services for free?” Good question.
While I do believe there are some very good SCORE and SBDC counselors, who is more likely to be attentive to your needs – the person who is helping you out of generosity in their free time or the person you are writing a check to?
I can’t speak for all consultants, but I wouldn’t be earning a paycheck if SCORE and SBDC satisfied all start-up needs. Plus, I provide flexibility ranging from assistance with the creation of a mini-plan to a formal plan and reviewing to editing a final document.
As for hiring a consultant to create a business plan for you, typically this will cost you the most. While this will free up your time for other start-up activities, you will miss an excellent opportunity to get to know your business and your market. It is through market research and developing your plan where you gain the most insight. If you need to pitch investors, you had better know your plan forwards and backwards.
Before we close out for the day, let me stress a couple of key points.
1. Create a plan.
Don’t get started without a plan. It is your roadmap taking you from an idea to success. How long do you want that road to be? If you set up shop and start without a plan, chances are high, you will have to pull over along the way and ask for directions. Getting lost and asking for directions after the fact will cost you time and money.
2. If it doesn’t add up, take two steps back.
While doing additional research to complete your plan, you may find data that suggests your idea won’t make money. Don’t dismiss the negative information and only look for data that supports your idea. It is better at this point to go back to review and alter your UVP and prime prospects. Don’t try to sell yourself on a bad idea.
3. Have a pro review it.
If this is your first time creating a plan or if you are creating a plan for a business in an industry other than that of your previous work experience, let a successful entrepreneur review it. If you are creating a mini-plan, you may be able to start without having someone else reviewing it (although it wouldn’t hurt to let one successful entrepreneur take a quick look).
If you are creating a formal plan, you may want to consider passing it out to three pros. At least one of the three should be a successful professional with experience within your target industry while at least one should be an outsider.
First, with three pros, if there is a trend in their responses, you are less likely to dismiss what they have to say. Additionally, you will typically find that they each may give advice not provided by the other two.
Second, an industry insider will help you with the areas of your business you don’t know you don’t know while an outsider can tell you whether your plan is in plain enough English. Not everyone that you pitch your plan to will be from your target industry. You don’t want to miss out on securing money because your language confuses them.
If you have questions or find you are struggling with areas of your plan, leave a comment below or write me at email@example.com.
Next up in the series, “Square Away Your Finances”.
All the Best,
The Solopreneur’s Guide